Gunfire erupted in Rangoon last night after the Defence Minister and army commander, General Saw Maung, announced that the military had taken power, imposed a curfew and banned demonstrations.

Gen Saw Maung said that the army had set up a 20-man 'organisation for building law and order' composed of senior commanders from the three armed services. 'All over the country the situation is getting shaky,' he said. 'The army thought it had the duty to take control. It has taken over the governing power of the country.'

In a radio broadcast, the general emphasised that the army would go ahead with elections already promised by the ruling Burma Socialist Programme Party and groups working for 'genuine democracy' should start preparing for the polls.

In addition to restoring law and order, he also promised to 'ease the people's food, clothing and shelter needs'.

But the intervention of Gen-Saw Maung - known more than anything else as a loyal supporter of Burma's strong man, General Ne Win - appeared to be another desperate bid to maintain the control of a regime battered and all but toppled in six weeks of popular uprising across the country.

In a reversal of last month's tactics, the army slapped an 8pm-4am curfew on the capital and banned gatherings of more than five people 'regardless of whether or not it is with the intention of creating disturbances or committing a crime.'

In an attempt to crack the strikes that have paralysed public administration and most services, the military ordered all government employees to return to work today, warning that if they were not back within a week they would face suspension.

But the announcement produced an immediate show of defiance from demonstrators assembling after the curfew hour in several parts of the city. Heavy bursts of automatic gunfire were reported and troops moved in to impose order, one diplomat reported. 'Demonstrators are cutting down trees all over the place to build barricades, he said.'

The military takeover has revived fears of a confrontation between troops and demonstrators in a city where many neighbourhoods are already cordoned off by bamboo stockades manned by vigilantes armed with machettes, knives and the lethal jingles, sharpened bicycle spokes, fired from catapults.

Gen Saw Maung, as head of the new military organisation, becomes Burma's fourth nominal ruler since Gen Ne Win , formally surredered ruling party chairmanship at the end of July. The last architect of a military crackdown, General Sein Lwin, was forced out of office after only 18 days when clashes between troops and demonstrators had already left thousands dead.

The government, Gen Saw Maung said, had made 'all the concessions' in offering multi-party elections. The crucial opposition demand for the formation of an interim government to ensure the election were free and fair, however, was ignored.

Since the offer a week ago hundreds of thousands of people have staged daily demonstrations in the capital to ram home the message that they will settle for nothing less than a change of government.

The military takeover will be a blow to opposition leaders, who, while urging restraint and non-violence, were coming under increasing pressure for results from student organisations that have proved to be the powerhouse of the campaign.

A new military order suggests there will be no pursuit of the negotiations that had started through intermediaries between the opposition and the last government leader, BSPP chairman, Dr Maung Maung.

Gen Saw Maung called on the public not to 'break up' the armed forces or the state would be in danger of losing independence 'and we, together with all the people, will have to face grave dangers ...'